Author Question: Suppose there is a reduction in cash flow. This suggests that A) firms have decreased their ... (Read 41 times)

Kthamas · **on:** Jun 30, 2018

Suppose there is a reduction in cash flow. This suggests that

A) firms have decreased their expectations of future profits.
B) the real interest rate has increased.
C) the rate of depreciation has increased.
D) current profits have decreased.
E) all of the above

Question 2

Suppose the nominal interest rate is zero. In this situation, the present discounted value of a finite sequence of future payments is equal to which of the following?

A) zero
B) the sum of the all payments divided by the rate of inflation
C) the average value of each payment
D) the sum of all payments
E) the square of the sum of all payments